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The Lasting, Positive Impact of Sarbanes-OxleyIssue: 2021 Fourth QuarterSOX’s effect on corporate accountability is far-reaching and effective. Next year will mark the 20th anniversary of the passage of the Sarbanes-Oxley Act, federal legislation that has had an enormous — and mostly positive — impact on the integrity and reliability of companies, their finan...
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Dodd-Frank and Corporate GovernanceIssue: 2021 Fourth QuarterThe law of unintended consequences? The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) was enacted in response to perceived excesses and other dysfunction in the financial markets that precipitated the 2008 financial crisis. The public discourse surrounding the adoption ...
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Chair and CEO: To Split or not to Split?Issue: 2021 Fourth QuarterThis so-called best practice isn’t yet universal. In September, insurance giant AIG became the latest high-profile corporation to bestow the additional title of chairman on its CEO, Peter Zaffino. “The AIG board of directors has great confidence in Peter’s ability to cont...
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The FCPA-SOX-Dodd-Frank TrifectaIssue: 2021 Fourth QuarterA roundtable discussion on the three laws that make board service what it is today. Directors & Boards was founded just before the passage of the Foreign Corrupt Practices Act (FCPA), which in 1977 prescribed strict internal auditing controls and disclosures from U.S. corporations. Th...
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What He Taught: An Homage to Jim KristieIssue: 2021 Fourth QuarterThe longtime editor of Directors & Boards, who died earlier this year,helped others to shine. “Editor,” derived from the Latin edere (to produce or bring forth), may well be the most ambiguous word in the English language. It can signify anything from the eagle-eyed proofreader who fixes ty...
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Private Boards’ “Inflection” MomentThe scenario: A health diagnostic company’s product strategy is to “fake it till you make it,” its employees are expressing concerns over leadership and a multimillion-dollar distribution deal puts bad data in the hands of patients. Any one of these offenses should have had people crying foul and as...
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Revaluing Assets and Liabilities When Paying Dividends or Repurchasing SharesDelaware provides new guidance for boards. Boards of directors often seek to return cash to stockholders, in the form of either dividends or stock buybacks. Both methods are common for public companies. In a private equity-backed company, the owners frequently accompany this with a recapitaliza...
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Strategic Planning: How to Create Alignment Between the Board and Management TeamCreating alignment between managements strategic plan and the vision of the board of directors is critical to enable the success of a high-performance organization. Developing a streamlined and efficient process that yields a succinct strategy is the byproduct of truly exceptional planning. When ali...
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Upheaval: Healthcare Boards Embrace Pandemic-Driven ChangeThe COVID-19 pandemic upended the healthcare industry and accentuated its shortcomings. But the pandemic also catalyzed innovation, forcing healthcare boards to orchestrate change with speed, agility, and flexibility.Now, board members face a new challenge. Build on the momentum created by two years...
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Board Assessments: Report Card or Board Team-Building Exercise?Every year, boards of directors around the world undertake what for most is a lackluster exercise — the annual board assessment. Assessments were largely considered and designed as a compliance vehicle when they were initially mandated by the New York Stock Exchange in the early 2000s. Therein lies ...
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What Board Members Need to Ask Management About Supply ChainsTo put it mildly, it hasn’t been an easy time for anyone in logistics. The COVID-19 pandemic continues to keep supply chains tangled, and risks, including extreme weather events, have begun to look less like outliers and more like harbingers of an unpredictable future.It’s unsurprising that a world ...
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International Group to Create Global ESG StandardsIn connection with the United Nations Conference of the Parties on climate change in Glasgow, Scotland, an international organization announced its formation via the merger of several smaller groups to create standardized global ESG metrics and reporting frameworks.Acronyms abound, but here are a co...
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Sustainability is a core business imperativeSustainable business practices result in improved financial performance, and leaders — including board members — must be able to explain to their stakeholders what role the organization plays in addressing societal challenges.The ongoing pandemic and social justice movements have underscored ESG pri...
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Educational Updates for the BoardAfter 15 years of governance experience, I’m still surprised at the lack of awareness many board members have around the importance of continuous education. Maybe I shouldn’t be so astonished. Being recruited to a board of director role is prestigious and implies you bring valued insight, trust and ...
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A New TSR for Boards: An argument for focusing on talent, strategy and risk.Issue: 2021 Third QuarterA new book by three governance experts argues that boards should focus on a new kind of TSR. Instead of “total shareholder return,” the authors propose “talent, strategy and risk” as a measure of performance that can help the corporation meet institutional investor pressure for a longer-term outlook...
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Serving the CEO: The board can and should take items off the CEO’s plate.Issue: 2021 Third QuarterIrene Rosenfeld said in 2015 that, as CEO of the global snack maker Kraft/Mondelez, she spent a quarter of her time dealing with activist investors Nelson Peltz and William Ackman.The relationships were contentious, particularly with Peltz, according to various reports. Rosenfeld ultimately encourag...
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Can Any Board Member Ever Be Truly Independent?Issue: 2021 Third QuarterBoth the NYSE and Nasdaq require the boards of listed companies to have a majority of independent directors and audit committees that are composed solely of independent board members.But there is an argument about what makes a board member independent. Technically, independence means that the direct...
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Strengthening the “Pro” in Professional DirectorIssue: 2021 Third QuarterLord Boothby, a former Tory member of Parliament, described his experience as a corporate director to TIME magazine in 1962: “No effort of any kind is called for. You go to a meeting once a month, in a car supplied by the company. You look grave and sage. If you have five of them, it is total heaven...
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Benefit Corporation Law and Governance: Pursuing Profit with PurposeIssue: 2021 Third QuarterIn his book, Benefit Corporation Law and Governance: Pursuing Profit with Purpose (Berrett-Koehler Publishers, 2018), Frederick H. Alexander has provided valuable insight into one of the most important developments in corporate law — the advent and development of the benefit corporation.Benefit corp...
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The Promise and Peril of the Institutional InvestorIssue: 2021 Third QuarterThe rise in prominence and influence of the institutional investor over the last 30 years has been the source of great good for the American corporate scene. The modern corporate governance movement was initiated and propelled to spectacular success by the efforts of the institutional investor class...